Hi, my husband is a sole trader electrician and has always owned his own van. However, he now wants to look at leasing a van instead but has questions about this. We have been told that the van rental payments are 100% tax deductible, can you please explain what this means exactly. Also, what happens at the end of the leasing term? Would there be an opportunity to purchase the vehicle? My husband is interested in either a Ford Transit Connect or Ford Transit Custom. Can you give an idea of what deals there are available? Any help would be greatly received.
Our expert Richard answered...
Hi Jenny, thank you for getting it touch. The end of contract options would depend on which type of lease you decided to take out, this would also affect the tax benefits. Contract hire is the most popular option, where you simply hand the vehicle back at the end of the term subject to mileage and damage. This contract is, as you mentioned up to 100% tax deductible, which means you will be able to offset up to 100% against your taxable profits at the end of the year, lowering your tax bill. Please check with your accountant that this would apply to you.
Here is a link to our website where it will explain all the contracts in more detail https://www.vanarama.com/finance-info/van-finance-options.html
Thanks, Richard Wells.